Supply and Demand

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Supply and Demand

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Title: Supply and Demand
Author: Hubert D. Henderson
Release Date: January 6, 2004 [EBook #10612]
Language: English
Character set encoding: ISO-8859-1
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AND DEMAND ***

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SUPPLY AND DEMAND
By Hubert D. Henderson M.A.

With an Introduction by J.M. Keynes M.A., C.B.
1922.

INTRODUCTION
The Theory of Economics does not furnish a body of settled
conclusions immediately applicable to policy. It is a method rather than
a doctrine, an apparatus of the mind, a technique of thinking, which
helps its possessor to draw correct conclusions. It is not difficult in the
sense in which mathematical and scientific techniques are difficult; but
the fact that its modes of expression are much less precise than these,
renders decidedly difficult the task of conveying it correctly to the
minds of learners.
Before Adam Smith this apparatus of thought scarcely existed.
Between his time and this it has been steadily enlarged and improved.
Nor is there any branch of knowledge in the formation of which
Englishmen can claim a more predominant part. It is not complete yet,
but important improvements in its elements are becoming rare. The
main task of the professional economist now consists, either in
obtaining a wide knowledge of relevant facts and exercising skill in the
application of economic principles to them, or in expounding the
elements of his method in a lucid, accurate and illuminating way, so
that, through his instruction, the number of those who can think for
themselves may be increased.
This Series is directed towards the latter aim. It is intended to convey to
the ordinary reader and to the uninitiated student some conception of
the general principles of thought which economists now apply to
economic problems. The writers are not concerned to make original
contributions to knowledge, or even to attempt a complete summary of
all the principles of the subject. They have been more anxious to avoid
obscure forms of expression than difficult ideas; and their object has
been to expound to intelligent readers, previously unfamiliar with the
subject, the most significant elements of economic method. Most of the

omissions of matter often treated in textbooks are intentional; for as a
subject develops, it is important, especially in books meant to be
introductory, to discard the marks of the chrysalid stage before thought
had wings.
Even on matters of principle there is not yet a complete unanimity of
opinion amongst professors. Generally speaking, the writers of these
volumes believe themselves to be orthodox members of the Cambridge
School of Economics. At any rate, most of their ideas about the subject,
and even their prejudices, are traceable to the contact they have enjoyed
with the writings and lectures of the two economists who have chiefly
influenced Cambridge thought for the past fifty years, Dr. Marshall and
Professor Pigou.
J.M. Keynes.
CONTENTS

CHAPTER I
THE ECONOMIC WORLD
§1. THEORY AND FACT
§2. THE DIVISION OF LABOR
§3. THE EXISTENCE OF ORDER
§4. SOME REFLECTIONS UPON JOINT PRODUCTS
§5. SOME REFLECTIONS UPON CAPITAL
§6. THE FUNDAMENTAL CHARACTER OF MANY ECONOMIC
LAWS

CHAPTER II
THE GENERAL LAWS OF SUPPLY AND DEMAND
§1. PRELIMINARY STATEMENT OF THREE LAWS
§2. DIAGRAMS AND THEIR USES
§3. AMBIGUITIES OF THE EXPRESSIONS, "INCREASE IN
DEMAND," ETC.
§4. REACTIONS OF CHANGES IN DEMAND AND SUPPLY ON
PRICE
§5. SOME PARADOXICAL REACTIONS OF PRICE CHANGES
ON SUPPLY
§6. THE DISTURBANCES OF MONETARY CHANGES
§7. THE TRADE CYCLE

CHAPTER III
UTILITY AND THE MARGIN OF CONSUMPTION
§1. THE FORCES BEHIND SUPPLY AND DEMAND
§2. THE LAW OF DIMINISHING UTILITY
§3. THE RELATION BETWEEN PRICE AND MARGINAL
UTILITY
§4. THE MARGINAL PURCHASER
§5. THE BUSINESS MAN AS PURCHASER
§6. THE DIMINISHING UTILITY OF MONEY

CHAPTER IV
COST AND THE MARGIN OF PRODUCTION
§1. AN ILLUSTRATION FROM COAL
§2. THE VARIOUS ASPECTS OF MARGINAL COST
§3. THE DANGERS OF IGNORING THE MARGIN
§4. A MISINTERPRETATION
§5. SOME CONSEQUENCES OF A HIGHER PRICE LEVEL
§6. GENERAL RELATION BETWEEN PRICE, UTILITY AND
COST

CHAPTER V
JOINT DEMAND AND SUPPLY
§1. MARGINAL COST UNDER JOINT SUPPLY
§2. MARGINAL UTILITY UNDER JOINT DEMAND
§3. A CONTRAST BETWEEN COTTON AND COTTON-SEED,
AND WOOL AND MUTTON
§4. THE IMPORTANCE OF BEING UNIMPORTANT
§5. CAPITAL AND LABOR
§6. CONCLUSIONS AS TO JOINT SUPPLY AND JOINT DEMAND
§7. COMPOSITE SUPPLY AND COMPOSITE DEMAND

§8. ULTIMATE REAL COSTS